Canada Border Services Agency: Quarterly Financial Report—For the quarter ended December 31, 2021

1. Introduction

This Quarterly Financial Report (QFR) has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates, Canada's Economic Action Plan 2020 (Budget 2020) and Canada's COVID-19 Economic Response Plan.

Information on the 'raison d'être', mandate, role and core responsibilities of the Canada Border Services Agency (CBSA) can be found in Part III Departmental Plan and Part II of the Main Estimates.

The QFR has not been subjected to an external audit or review, but has been reviewed internally by the Departmental Audit Committee.

1.1 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying statement of authorities (Table 1) includes the department's spending authorities granted by Parliament, and those used by the department consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2020 to 2021 and 2021 to 2022 fiscal years. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the consolidated revenue fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of fiscal quarter and fiscal year-to-date (YTD) results

This section highlights the significant items that contributed to the net increase or decrease in resources available for the year and actual expenditures as of the quarter ended December 31, 2021.

Figure 1: Text version

	2020 to 2021	2021 to 2022
Net budgetary authorities	2,515,094	2,437,013
Expenditures for the quarter ending December 31	573,435	531,135
Expenditures for the quarter ending September 30	498,460	554,323
Expenditures for the quarter ending June 30	433,101	466,375
Total Expenditures to date	1,504,996	1,551,833

2.1 Significant changes to authorities

For the period ending December 31, 2021, the authorities provided to the CBSA comprise of the Main Estimates, Supplementary Estimates (A and B), Treasury Board (TB) approved Budget 2020 measures and any unused spending authorities carried forward from the previous fiscal year.

The Statement of authorities (Table 1) presents a net decrease of $78.1 million or 3.1% of the agency’s total authorities of $2,437.0 million at December 31, 2021 compared to $2,515.1 million total authorities at the same quarter last year.

This net decrease in the authorities available for use is the result of an increase in Vote 1 – Operating Expenditures of $23.7 million, a decrease in Vote 5 – Capital Expenditures of $84.8 million and a decrease in budgetary statutory authorities of $17.0 million.

Vote 1 – Operating

The Agency’s Vote 1 Operating increased by $23.7 million or 1.2%, which is attributed to the net effect of the following significant items (excluding the statutory authorities):

The main increases contributing to the changes in operating funding include:

• $61.8 million in increases due to carry forward
• $18.2 million increase as an result of an internal reallocation of resources as approved in 2020-21 Supplementary Estimates B
• $8.6 million increase for ArriveCan
• $7.4 million increase in collective agreements
• $2.7 million increase for the Gordie Howe International Bridge and
• $2.0 million increase for the Application Modernization Initiative

The main decreases contributing to the changes in operating funding include:

• $67.3 million in decreases as described in the CBSA Quarterly Financial Report for the quarter ended June 30, 2021
• $9.8 million decrease as approved in 2020-21 Supplementary Estimates B

Vote 5 – Capital

The Agency’s Vote 5 Capital decreased by $84.8 million or 28.4%, which is attributed to the net effect of the following significant items:

The main decreases contributing to the changes in capital funding include:

• $65.4 million in decreases as described in the CBSA Quarterly Financial Report for the quarter ended June 30, 2021
• $18.2 million in decreases as an result of an internal reallocation of resources as approved in 2020-21 Supplementary Estimates B
• $4.9 million decrease due to carry forward

The main increases contributing to the changes in capital funding include:

• $3.8 million increase for ArriveCan

Budgetary Statutory Authorities

The Agency’s Statutory Authority related to the employee benefit plan (EBP) decreased by $17.0 million, or 8.2% from the previous year.

Related links

• CBSA Quarterly Financial Report for the quarter ended June 30, 2021
• Supplementary Estimates B

2.2 Explanations of significant variances in expenditures from previous year

As indicated in the statement of authorities (Table 1), the agency’s expenditures for year-to-date, at quarter end December 31, 2021 were $1,551.8 million, as compared to $1,505.0 million for year-to-date, quarter ending December 31, 2020. The net increase of $46.8 million or 3.1% in expenditures is mainly due to the following items:

• Increase of $69.7 million or 5.5% in Vote 1 Operating Expenditures year-to-date used at quarter end. The increase in expenditures is mainly attributed to the following items: a $23.7 million increase for Vacation Expenses for Indeterminate Employees, a $19.3 million increase in Overtime, an increase of $11.1 million in Shared Services – Information Technology, an $8.6 million in Information Technology consultants and a $6.5 million increase in Building Protection Services.
• Decrease of $11.4 million or 13.0% in Vote 5 Capital Expenditures year-to-date used at quarter end. The decrease in expenditures is mainly attributed to a $9.7 million decrease in Information Technology Consultants and a $1.9 million decrease in Laboratory and Medical Equipment and Parts.
• Decrease of $12.0 million in statutory expenditures.

As indicated in the departmental budgetary expenditures by standard object (Table 2), the net increase by standard object is mainly attributed to:

• Increase of $33.0 million for Professional and Special Services can be mainly attributed to an increase of $11.1 million in Shared Services – Information Technology, a $6.8 million increase in Other Consulting Services, a $6.5 million increase in Building Protection Services and a $3.3 million increase in Property Management Fees and a $2.3 million increase in Systems Services including Facility Management.
• Increase of $9.6 million for Transportation and Communications, which can be attributed to a $7.7 million increase in total travel and an increase of $1.8 million for Mobile Radios.
• Increase of $6.8 million for Personnel due to vacation expenses, salaries and overtime pay, which is consistent with previous years’ trends.
• Increase of $4.5 million in Acquisition of machinery and equipment can be attributed to a $6.2 million increase in Computer Software Expense, which is offset by a decrease of $1.9 million in Laboratory and Medical Equipment.
• Decrease of $5.8 million in Acquisition of land, buildings and equipment for Facilities Capital Projects.
• Decrease of $2.0 million in Repairs and Maintenance can be attributed to a decrease of $1.5 million in Facilities Non Capital Projects-Public Works Government Services Canada and a decrease of $0.7 million in Repair and Maintenance of Computer Equipment.

Figure 2: Text version

	2020 to 2021	2021 to 2022
Vote netted revenue	24,030	24,030
Revenue collected for the quarter ending December 31	3,414	4,957
Revenue collected for the quarter ending September 30	3,362	3,808
Revenue collected for the quarter ending June 30	4,025	1,259
Total Revenue collected to date	10,801	10,024
Low VNR amounts collected in Quarter 1 of 2021 to 2022 are as a result of closed borders due to the ongoing impacts of the COVID-19 pandemic.

The planned revenue from the sales of services reflects the agency’s revenue respending authority. The year-to-date revenue from the charge of services has decreased by $0.8 million or 7.2% due to the ongoing impacts of the COVID-19 pandemic.

3. Risks and uncertainties

The CBSA’s changing operating environment makes the agency particularly susceptible to external drivers that are largely beyond its control. Together, these drivers have the potential to affect the organization’s ability to adhere to its annual financial plan.

The agency is pursuing several large information technology (IT) and physical infrastructure projects. Most are multi-year in nature and represent substantial investments. The COVID-19 pandemic continues to present challenges and is causing unpredictability with certain Agency activities, necessitating their re-prioritization to address pressing matters and possibly resulting in scheduling delays for some projects.

In addition, because the CBSA depends on other government departments and/or external stakeholders for the development and implementation of many of its major projects, scheduling delays are even more likely. As each organization must also manage the repercussions the COVID-19 pandemic is having on its own operations, assisting the CBSA in the advancement of its projects in a timely basis can become challenging due to conflicting priorities. Despite these conditions, the Agency has met key deadlines and deliverables on many of the major projects currently underway and is on track for the next set of deliverables.

Beyond the effects of re-prioritization on the way resources are allotted, the COVID-19 pandemic is prompting a need for adjustments to the design of certain projects, which could further delay the execution and delivery of these projects and result in funding lapses.

Delays can lead to other challenges as project costing does not always allow for fluctuating costs for materials, commodities and other market rate price changes. Inflation also drives up costs on deferred or delayed projects.

The agency strives to mitigate financial risks by risk-rating its projects, conducting periodic project reviews, and by holding regular budget discussions. Such activities are informed and supported by agency quarterly integrated project reporting processes.

4. Significant changes in relation to operations, personnel and programs

4.1 Key senior personnel

Marco E.L. Mendicino was appointed as the new Minister of Public Safety on October 26, 2021.

4.2 Operations

On November 8, 2021, the U.S. land border was opened to non-U.S. citizens for non-essential purposes, with the requirement that travellers possess proof of an approved COVID-19 vaccination as outlined on the Centers for Disease Control and Prevention’s website. While traveller volumes have increased, they have not reached pre-pandemic levels, due largely to the more stringent entry requirements for travellers coming to Canada (proof of vaccination and a negative pre-entry molecular test taken within 72 hours of arrival). Ongoing commercial volumes remained unaffected by these changes.

The federal government announced on October 6, 2021 that all employees of the Core Public Administration must be vaccinated, with a deadline of October 29, 2021 to attest to their vaccination status in the Government of Canada’s Vaccine Attestation Tracking System (GC-VATS). Those who remained unvaccinated or continued to refuse to attest to their vaccination after that date were placed on administrative leave as early as November 15, 2021.

Finally, in late 2021, the emergence of the new Omicron variant impacted operations, as some provinces mandated a return to telework in their jurisdictions and imposed further health protection measures, such as a curfew in Quebec. On December 15, 2021, the Government of Canada issued a travel advisory against international travel for non-essential purposes. The rapidly-evolving nature of the pandemic has intensified the importance of ensuring that Border Services Officers and travellers are kept aware of the latest developments for entry requirements.

5. Approval by senior officials

6. Table 1: Statement of authorities (unaudited)

7. Table 2: Departmental budgetary expenditures by standard object (unaudited)